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Wednesday, October 31, 2007

Murdoch, a Folk Hero in Silicon Eyes on Future of Media

At the Web 2.0 Summit a few weeks ago, MySpace held an after-party at the San Francisco Museum of Modern Art. With a guest list of Silicon Valley luminaries and a party room redone in white — carpet, chairs, table and yes, mostly people — it was a very post-modern indication that MySpace, the social network owned by the News Corporation, was ready to engage with its brethren to the north by opening an office here.

Half an hour into the party, there was a ripple of excitement, and people started murmuring and pointing toward the door. When the crowd parted, I expected to see Mark Zuckerberg, the young overlord of Facebook, or Steve Ballmer, the battle-hardened Microsoft veteran. Then again, this is a MySpace party, so maybe Britney Spears or Lindsay Lohan? Instead, it was Rupert Murdoch — old school, old media, and at 76, just plain old.

From the reaction of the crowd, it might as well have been Lindsay Lohan. He was overwhelmed by an immediate onrush of hospitality as the geekerati lined up to get a word with him.

Back East, the elites generally regard Mr. Murdoch, most especially with his purchase of The Wall Street Journal, as if a particularly unpleasant coup was under way. He is treated much the way he is in London (where he has owned The Times for more than 20 years), as an immigrant, a man of suspect values and provenance, even though he runs a $70 billion diversified media company.

In the United States, Mr. Murdoch’s appeal is thought to work in the heartland, where Fox News takes aim. But on the left coast, Mr. Murdoch is truly among friends. The attendees at the Web 2.0 conference know him as the ultimate market timer, the guy who swooped in out of nowhere and bought MySpace for $580 million two years ago, before its audience doubled and before social networks became the platform of the future. And this was before Facebook got a valuation of $15 billion via an investment from Microsoft on Wednesday.

“This is not just another rich guy — there are a lot of those around here,” said John Battelle, one of the summit’s hosts. “He built News Corp. from not much, with his own two hands, and this is a room full of entrepreneurs. The other thing this room respects is intelligence, and they can tell he is smart, really smart, not just from what he says, but what he has done with MySpace.”

The same characteristics that make Mr. Murdoch a nonmember of the club in the East — a lack of correctness and, occasionally, business civility — make him something of a folk hero in the context of the new economy, which is peopled by insurgents who see him as a fellow pirate, even though he already captains a giant ship.

In a joint interview on the stage of the summit with Chris DeWolfe, a MySpace founder, earlier that night, Mr. Murdoch brandished both humility and hubris. He said that the folks at News Corporation were “trainees” when it came to new media but added elsewhere that CNBC was “half dead,” that MySpace was probably worth 30 times what he had paid for it, and he all but licked his lips when he responded to a question about whether he would like to use The Wall Street Journal to “kill” The New York Times.

“That would be nice,” he said.

At a conference where most chief executives proceeded with euphemistic elegance — Mr. Ballmer stonewalled questions about negotiating for a piece of Facebook even as the deal was being consummated and gave a long answer to a question about Google without mentioning its name — Mr. Murdoch answered almost every question put to him, often naming names and frankly laying out his ambitions. He was a hit in the room and the belle of the ball afterward.

And in a move that plays like raw meat in this lion’s cage of developers, Mr. DeWolfe and Mr. Murdoch said MySpace would open the platform to applications or so-called widgets from outside programmers, a decision Facebook made in the spring.

“He is candid and he is aggressive,” said Jason Calacanis, who sold his start-up, Weblogs, to AOL for a reported $25 million two years ago. “He said during the discussion that he basically wanted to crush The New York Times and crush CNBC. When do you hear somebody in that kind of position being so candid?”

It’s not just Mr. Murdoch’s aggression the audience responds to. In a speech to the American Society of Newspaper Editors in 2005, Mr. Murdoch suggested that newspapers were “immigrants” to the digital space who needed to learn from “natives.”

He seems to have gotten the hang of things pretty quickly, telling the Web 2.0 crowd, “No one delivers huge audiences anymore.” One of the conference’s themes was that advertisers, who will finance things as diverse as cellphones and desktop applications, are no longer after just eyeballs, but consumer behavior, too.

For a so-called old media company, News Corporation has done significant work to move from taking orders for mass inventory to offering focused buys with specific audience characteristics. Mr. Murdoch recently bragged at a conference about being able to deliver, say, all the optometrists in the London area — which is very Web 2.0, as they say.

I waited my turn in the queue at the party, and Mr. DeWolfe, who had just signed a deal for two more years with News Corporation, made an introduction. Amid the throbbing house music, Mr. Murdoch and I chatted briefly about his purchase of The Wall Street Journal, which will be completed in December.

Perhaps in an effort to keep cognitive dissonance at bay, the journalists I know at The Journal have changed posture from doomsaying to a growing curiosity about what it will be like to work for someone who actually wants to invest in newspapers. I mentioned as much to Mr. Murdoch. “That is the sense I am getting,” he said.

I also joked that he might have to cut a lot of checks to compete with my employer for national and international news, adding that this has been a tough business of late. But he insisted there was “plenty of room for growth” in the newspapers.

“We can’t wait to get started,” he said.

Others can’t wait either. “Who isn’t interested in seeing some other newspaper people who want to fight and do bold things?” Mr. Calacanis observed. “Murdoch is someone who is actually investing in newspapers. Even you have to be rooting for that.”